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Many people dream about living in the tropics. People imagine a place where the weather is always warm. When considering the tropics, Costa Rica is often high on people’s lists, as are the Leeward Islands of the West Indies. Other people might consider Hawaii, the Mexican Baja peninsula, or even more exotic islands of the South Pacific. However, the real estate market in Panama is a hidden gem right in our own Western Hemisphere.
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Panama real estate has been on an upward trajectory for several years. Several Fortune 500 companies have regional headquarters in the country. Luxury resorts and living spaces are popping up on the Caribbean and Pacific coasts. Panama offers unique value propositions that no other tropical country can match.
The Panama Canal supplies a steady influx of international cash flow. Panama has political and economic stability, making it a smart place for Realtors to direct their clients to invest. In fact, so many high-end investors value Panama right now Realtors and real estate agents should do their due diligence to learn what is attracting all this international investment.
Before discussing how Realtors and agents can assist their clients in taking advantage of Panama’s specific advantages, let’s examine some hard numbers that should pique the interest of buyers and, therefore, also pique the interest of their real estate agents.
Panama by the numbers
- 4.4 million: Panama’s current population.
- $1.5 billion: Annual foreign direct investment flowing into Panama.
- 80 flights: The average number of daily direct international flights to Panama City’s Tocumen International Airport.
- 19 North American cities: The number of cities in the U.S. (17) and Canada (2) with direct flights to Panama.
- 2 years: The maximum time you can spend outside Panama without losing your visa.
- 0 percent tax: In Panama, expatriates benefit from a 0 percent income tax rate on foreign-earned income due to the country’s territorial tax system, which only taxes income generated within Panama.
Continue reading to get a little more into the numbers above, as well as other reasons why Panama is the ideal destination for real estate investment.
An emerging luxury market
Foreign investment is critical to the Panama real estate market. Ironically, Panama’s building boom started in 2006 with two ultimately canceled projects. The Palacio de la Bahia was the first proposed skyscraper in Panama City. After that, the Ice Tower was to be a 104-story building on Panama City’s seafront on Balboa Avenue. While developers didn’t finish these projects, they caught the eyes of American investors who saw the potential for investment opportunities in Panama. These investors later built and opened a luxury hotel in 2011.
Not long after construction for that project began, Spanish investors started planning a project on Balboa Avenue. By the 2010s, Panama’s banks were offering incredibly favorable mortgage terms. Infrastructure projects modernized the country, which had become a hot retiree destination. The strategic location and easy immigration laws welcome foreigners to invest and move into the country. Combine that with its stable economy and political culture, and you have an attractive environment for investment.
As a real estate agent, you might ask yourself why you should care about that. You should care because if you have clients interested in investing in luxury real estate or retiring abroad, you should direct them to Panama. It’s the best and most well-rounded country in which to invest in Central America. If your clients are interested in making money in real estate, Panama has a history of welcoming international investment, and they plan to continue supporting it.
Panama is the most modern country in Central America, but not the only country receiving outside investment. Neighboring Costa Rica has been a target for foreign investment for much longer than Panama has. However, Costa Rica has gone in a much different direction than Panama. You can click here for an in-depth review from someone who has lived in both places.
There are genuine differences between Costa Rica and Panama regarding the cost of living, infrastructure and modernization. Costa Rica tends to be more expensive than Panama, and the expat community in Costa Rica is more established.
However, they have yet to do as much to modernize their infrastructure. Costa Rica is a great place for people who prefer outdoor living. Panama’s urban life is more vibrant, with better shopping and amenities.
But what sets Panama apart from its Latin American peers regarding growth and investment? Several factors establish Panama as the go-to spot to direct your clients in Latin America.
Economic stability and growth
Panama uses the U.S. dollar as its currency so that investors from the United States can feel secure in their investments. Costa Rica is another popular investment destination, but the country uses its own currency. The Costa Rican colón often fluctuates wildly against the dollar. With Panama using the dollar, investors can have more confidence and worry less about exchange rates.
Another benefit is how far the dollar stretches in Panama. Due to the size of Panama’s economy, the dollar goes further, allowing people to get more for their money. Advising your clients to invest in similar properties in Miami, Los Angeles, or New York would be much more expensive than in Panama City and offer them much smaller returns. A luxurious lifestyle in Panama is more attainable. Panama also consistently ranks in the top 10 “Best Countries for Business” for those clients investing for business purposes.
Political stability
The Panamanian government also understands the role of foreign investment in its economic health. As a result, it has enacted long-standing policies favorable for international investment and foreign ownership of companies and property. Panama also has favorable tax laws for people who live in Panama but conduct business outside the country. The recent election in Panama has investors optimistic that the policies that burgeoned this economic growth will continue.
Infrastructure
What truly separates Panama from its neighbors, including Costa Rica, is its infrastructure. Panama’s infrastructure is as modern as almost anywhere else in the world. The country has paved roads, good drainage to prevent flooding and fast internet connections.
People who try living without these things, as they may in Costa Rica and Panama’s other neighbors, often learn quickly to never take them for granted again. Living in Panama’s cities is similar to living in any U.S. or European city.
Business opportunities
Panama’s economic and political stability provides a world-class business atmosphere. It is not a third-world country when it comes to business. The Panama Canal plays a big role, and Panama has the world’s second-largest free trade zone. However, the canal isn’t the only reason Panama attracts billions of dollars in direct foreign investment.
Panama is a tax haven for many businesses and individuals. Many Fortune 500 companies have regional headquarters in Panama City. They come because the country levies no income, corporate, capital gains or estate taxes on income made outside the country. Income made in the country is subject to taxation, but international income is tax-free. That means you can reinvest in the company or other ventures.
Panama has also long been a haven for retirees and a place to direct clients looking for a unique place to retire where their retirement savings will stretch farther to suit our longer life expectancies.
Easy access
Did you know flying from Houston to Panama City takes the same time as from Los Angeles to New York? Panama is at the bottom of Central America. Still, it is very accessible from many locations in the U.S. Seventeen cities in the U.S. have direct flights to Panama, including Miami, Los Angeles, Tampa, Denver, and Washington, D.C. Our friends from Canada who are flying out of Toronto and Montreal can also enjoy non-stop flights to Panama City.
This accessibility simplifies doing business in Panama and makes it easier for retirees and others relocating to Panama to justify the move. They know they’re only a plane ride away from friends and family back in the States, which is a terrific selling point for purchasing real estate in Panama.
Tourism and lifestyle
Panama has long been a destination for tourists and retirees. Panama’s use of the U.S. dollar and smaller economy have many benefits. For tourists and retirees, luxury real estate is more affordable than in other markets. A person who spends $6,600 monthly in Orlando would only need $4,100 to live in Panama City. That’s a huge difference that adds up over time.
Your clients can also invest in luxury resorts in Panama. The country is the perfect option for people who want their vacation dollars to stretch further. That’s why many resorts are opening on both coasts and in Panama’s jungle and mountain regions.
The rich and famous have also discovered Panama. People recently spotted Mark Zuckerberg’s luxury yacht in Panama. Chris Hemsworth recently visited the Stem Cell Institute in Panama to learn about their cutting-edge work in regenerative medicine. Mel Gibson, Brad Pitt, Arnold Schwarzenegger, Mick Jagger, Paris Hilton and Daniel Craig have all purchased property in Panama, which could also be a selling point for your clients.
Panama has white sandy beaches, rugged mountain terrain and lush jungles. Depending on what they’re looking for, encouraging your clients to buy real estate in Panama puts them on a path to easy living or good fortune in their investment portfolios. The investment opportunities in Panama are as diverse as its environment. The expat communities are warm and welcoming.
Panama offers unique value propositions unmatched in Costa Rica or any other tropical country. The iconic Panama Canal is one of the seven wonders of the modern world. The U.S. dollar drives the Panamanian economy, simplifying the transition from the U.S. Panama, which is the largest banking center in Central America.
It also has access to both the Atlantic and Pacific oceans. Panama offers the ideal blend of modernity and tradition with its natural beauty, private islands and beaches, modern amenities, the historic Casco Viejo (a UNESCO World Heritage site), and the first man-made island in the Pacific.
Panama offers so much in terms of investment opportunity and high quality of life that it is an ideal and lucrative landscape for retirees, investors, digital nomads, or anyone looking to put down roots in this growing and prosperous country. As a real estate agent, you owe it to your clients to explore this burgeoning market and help them find their version of paradise.
Victoria Levitam is the Managing Partner at The Agency Panama and CEO of Pars Realty.
